Total’s final Iran project decision by summer

France’s energy giant Total says it plans to make a final investment decision on a $2 billion gas project in Iran within the next few months provided that nothing is modified with regards to the sanctions against investing in the country’s oil sector projects.

Total Chief Executive Patrick Pouyanne told reporters in Paris that the development of Phase 11 of Iran’s South Pars gas field – a project that his company won from the National Iranian Oil Company (NIOC) last year – will be among a couple of projects to be approved by the company to start by the summer.

However, Pouyanne emphasized that a decision to that effect will depend on whether US President Donald Trump waives executive orders against investments in the Iranian energy sector – as did his predecessor Barack Obama. 

"There are two executive orders that are supposed to be renewed before summer," he said, explaining that Obama’s administration had signed waivers suspending the sanctions.

"These are supposed to last about 18 months. So President Trump will have to, or not, renew these sanction waivers," Pouyanne told journalists in Paris, as reported by Reuters.

Total – together with China National Petroleum Corporation (CNPC) and Iran’s Petropars – signed a Heads of Agreement (HOA) with the NIOC last November to invest in Phase 11 of South Pars.

The value of the project was estimated by the media at the time at $4.8 billion and was to the same effect seen as the biggest contract that the Islamic Republic had awarded for an industrial project after the lifting of the sanctions in early 2016.

Iran had earlier announced that Total had already started certain basic operations for the development of Phase 11 of South Pars. The announcement was made by NIOC chief Ali Kardor. 

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• Total sets Iran energy investments in motion

The development of Phase 11 would be carried out through the new format of Iran’s oil sector contracts and would also require the developers to provide all investments.

Total was negotiating over the development of the same project with the NIOC before the US-led sanctions drove it out of Iran’s oil sector projects in 2012. 

Total’s negotiations with NIOC over the development of Phase 11 also included the production of liquefied natural gas (LNG) in what was expected to become Iran’s first such project named Pars LNG. The project, however, was abandoned after the sanctions banned investments by foreign companies in Iran’s oil industry among a series of other draconian economic restrictions imposed against the country. 

A top Total official had emphasized in November that the election of Trump as the President of the United States would not undermine the company’s investments in Iran.

"We have always said that we are interested in returning to Iran on condition that the investments that are proposed to us are sufficiently attractive and knowing that for us, it was out of the question to do anything that would contravene international rules," Philippe Sauquet, the firm's head of gas, renewables and power, told reporters told reporters on the sidelines of an energy summit in Paris.

"The election that took place in the United States does not change anything," Reuters quoted him as saying.

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• Total says Trump win not to affect Iran deal

Elsewhere in his remarks, Total chief Pouyanne was quoted by Reuters as saying that based on the nuclear deal that was signed, the US government would have to prove that Iran had breached the agreement, for the new Trump-led administration to decide against renewing the waivers.

"So, either the waivers are renewed and as such, respect the Iran nuclear deal, which will allow us to execute the contract and we'll do so, or they decide to tear up the Iran nuclear agreement," Pouyanne said.

"In that case, we'll not be able to work in Iran."

He added that there was uncertainty on what the new White House administration would do.

Pouyanne said the decision to go ahead with the gas deal last November was a 'win-win' one, and that Total had some guarantees in place that protects the company financially if the project does not go through. 

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